Globalization:Why is the TNC globalizing?

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  1. Is it to reach a bigger market (“market access”)?
  2. Or is it to produce goods more cheaply and efficiently (“sourcing efficiency”)?
  3. Or is it both of these (“market access” and “sourcing efficiency”)?
  4. Or has the TNC always been globally organized because of its product (e.g., oil)?

A. If the TNC is globalizing to reach a bigger global market, investigate how it’s trying to expand its market share. Make two lists:

  1. What investments (new retail outlets, new supply chains, new subcontracts etc) is it developing?
  2. What countries is it targeting as future markets for sales?
  3. If your TNC is globalizing in order to produce goods more cheaply (“sourcing efficiency”), try to identify what parts of the production process it is off-shoring.
  4. Where is it off-shoring, and what are the particular cost/capability calculations involved (in short, is it to save money by accessing cheap labor, or to save time and guarantee high quality production by accessing an area with the right mix of infrastructure and technical capabilities)?
  5. How?
  6. Describe as clearly and specifically as possible when the TNC started to go global.
  7. Demonstrate as clearly and specifically as possible where it is globalizing.
  8. Give attention to the locational advantages in the places it globalizes and the conditions that create those advantages.  For example, is the local government initiating policies to reduce taxes for foreign business?  Are there institutions in place that suppress wages for workers?  Or are there environmental/ecological reasons? (i.e. climate for growing coffee beans).
  9.  Clearly explain why the corporation is globalizing: mainly for market access reasons, for sourcing efficiency reasons, or for some complex mix of the two. “To increase profits” is not a good answer to this question!  It may be true, but its true for all capitalist companies that seek to expand growth.
  10.  Explain in detail how it is globalizing–(for example, through mergers and acquisitions, contracting with independent suppliers, .etc).

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